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The weekly oil inventories data shows:

• Crude oil 0.833M vs 0.987M estimate
• Gasoline + 2.310M vs -0.109M estimate
• Distilates 2.308M vs 0.313M estimate

Other details:

• Cushing -1.704M vs -1.142M last week
• refining utilization w/e -0.5% versus expected -0.7%.
• Crude production 13.3M vs 13.3M previous week

Crude oil was trading at $66.69 just before the release. The price is currently trading lower at $65.93.

The private data released late yesterday forecast a larger than expected drawdown of -2.79M

This article was written by Greg Michalowski at www.forexlive.com.

Major US stock indices have extended the declines to the downside with the S&P index down -1.3%. The NASDAQ index is down -0.85% and the Dow industrial average is down -1.6%. The small-cap Russell 2000 is also lower with a decline of -1.40%.

US yields have moved back higher with the two year now down only -0.9 basis points at 3.60%. The 10 year note is down -1.9 basis points at 3.625%.

Crude oil is trading up $0.69 and $66.42. Although higher, that is coming off its highest levels for the day. The high price reached $67.58. The low price extended to $65.91. Yesterday the low price reached $65.27.

THE EIA weekly inventory data will be released at the bottom of the hour:

• Crude oil is expected and build up 0.987M
• Gasoline is expecting and drawdown of -0.109M
• Distillates are expecting a build of 0.313M

The private data showed another drawdown in crude stocks.

This article was written by Greg Michalowski at www.forexlive.com.

A snapshot of the markets are showing declines across the board.

After 25 minutes of trading,

• Dow industrial average is down -45 to .31 points or -1.11% at 40284.65.
• S&P index is down -37.49 points or -0.68% at 5458.03.
• NASDAQ index is down -29.17 points or -0.17% at 16996.71.

The small-cap Russell 2000 is down -16.19 points or -0.77% at 2018.24.

The losers in the Dow 30 led by UnitedHealth at down -2.01%. Home Depot is down -1.84% and Boeing is down -1.74%:

On the plus side

• Nvidia is trading up 1.94%
• Meta is up 0.25%
• Apple is up 0.20%
• Alphabet is up 0.69%
• Microsoft is up 0.31%

This article was written by Greg Michalowski at www.forexlive.com.

The day after the presidential debate in the US, Russia’s Putin is getting his shot in by saying maybe Russia should think about export restrictions like uranium, titanium, and nickel.

Trump said that he would solve the Ukraine- Russia conflict before he took office in January if elected. Harris said that Trump’s ego makes him think he is good buddies with dictators and that they play him by stroking his ego.

This article was written by Greg Michalowski at www.forexlive.com.

A Reuters poll is out and the survey of 65 economist show:

• 49 of 65 see one more cut between now and year-end.
• 16 of 65 see 2 rate cuts
• UK inflation to average 2.6% in 2024
• inflation to average 2.3% in 2025 (same as August poll).
• For this month, the expectations is that the central bank will keep rates unchanged at 5%

In August the Bank of England cut the bank rate to 5% from a 16 year high of 5.25%. The vote was 5-4. BOE Gov. Bailey said it would proceed cautiously to make sure inflation stayed low. Service inflation and wage growth are still about 5% making cutting rates more difficult for the central bank.

GDP released today showed the UK economy stalled in July (0.0% versus 0.2% expected.).

This article was written by Greg Michalowski at www.forexlive.com.

Citigroup now sees a 25 basis point rate cut in September down from 50 basis points prior to the CPI (and post the US jobs report last Friday). The CPI data did not do it.

Although their expectations for September have been tempered, they still expect 50 basis point cuts in November and December.

This article was written by Greg Michalowski at www.forexlive.com.

I moved from New Jersey in August 2001 to Arizona. My work in NY at the time of the move took me to the WTC each day on my commute. My work office was 2 blocks north of the WTC complex. Part of the WTC complex fell into the buildings just south of our building. A jet engine hit our building.

I was on the phone with my colleague at the time, and encouraged him to leave. He did, walking north and away, witnessing the horror of the day behind him, and wondering what might be next.

I knew people who died on the day who were trapped on the top floors of the buildings. They may have been ones who jumped. People I went to high school with. People who I knew from my years in the markets.

I remember them today. I remember their families. Their children are now adults, married, have children. I hope they are well and know that their Dads and Moms are not forgotten.

I talk about risk and controlling risk. Why? Because it reduces fear and fear is a trader’s worst enemy. It is hard to think… to trade clearly when fear is high. Understanding risk, helps control fear.

The opposite of fear to me is peace.

ON September 11, there was fear. Peace seemed far, far away as risk could not be controlled, it could not be defined. It could not be accepted and mitigated. Fear was “off the charts”. Peace was no where to be found, but it was eventually found.

Since then, others have gone through their own 9-11’s and peace seemed – and seems – far away. Have faith that peace is out there. It can and will be found. I remember you too as you search for your own peace.I will say it again….Peace.

This article was written by Greg Michalowski at www.forexlive.com.

• Prior month 2.9%
• CPI MoM 0.2% versus 0.2% expected
• Month over Month unrounded 0.187%

Core measures:

• Core CPI YoY 3.2% vs 3.2% expected.
• Core CPI MoM 0.3% vs 0.2% expected
• Core unrounded 0.281%
• real weekly earnings +0.5% versus -0.2% last month
• shelter inflation rose by 0.5%
• food increase by 0.1% after rising 0.2% in July
• tHE index for food away from home rose 0.3% for the month with food at home was unchanged
• energy prices fell -0.8% versus unchanged last month.

Indexes which increased in August include

• Shelter, airline fares, motor vehicle
  insurance, education, and apparel.

The indexes which decreased in August included:

• Used cars and trucks, household furnishings and
  operations, medical care, communication, and recreation were among those that decreased over the month.

• Supercore inflation MoM
• Supercore YoY

helter inflation rose by 0.5% in August which was the main factor all the

Fed expectations after the release :

• 30 basis point cuts versus 32
• 108 basis points of cuts between now and the end of the year versus 114 prior to the report
• 15% chance of a 50 basis point cut in September down from 29% prior to the report

This article was written by Greg Michalowski at www.forexlive.com.

For August, US Consumer Price Index (CPI) expectations are for a

• Headlined CPI 0.2% month-over-month (M/M) change (previously 0.2%),
• Annual headline CPI rate expected to ease to 2.6% year-over-year (Y/Y) from 2.9%.
• The core CPI, which excludes food and energy prices, is also expected to rise -0.2% M/M (previously 0.2%),
• The annual core CPI rate forecasted to remain steady at 3.2% Y/Y.

Last month the headline unrounded came in at 0.1549% while the core rose by 0.1652% – both below the 0.2% rounded numbers.

Shelter inflation is expected to moderate, with owners’ equivalent rent projected to rise by 0.33% and primary rent by 0.29%. Car insurance prices are expected to continue to increase .

The core Personal Consumption Expenditures (PCE) inflation, the Federal Reserve’s preferred measure, is expected at at 2.6% Y/Y by December 2024. While disinflation is expected in the auto, housing rental, and labor markets, it could be balanced by potential increases in healthcare and car insurance costs.

Another metric the Fed will be watching is ‘supercore’ inflation, which is CPI services ex-housing. It was at 4.5% y/y last month and that’s a reminder that goods are doing all the heavy lifting in the report at the moment, in part because insurance rates take a long time to be passed on.

As far as the Fed rate expectations before the release, there is -32 basis points cuts priced in for September with -114 basis points of cuts between now and year-end. The Fed meets next week with their interest rate decision due at 2 PM on Wednesday.

This article was written by Greg Michalowski at www.forexlive.com.

Headlines:

• Yields fall reverberates to broader markets to start the day
• USD/JPY Technical Analysis – Expectations for a 50 bps cut remain alive
• What is the distribution of forecasts for the US CPI?
• BOJ’s Nakagawa: Hard to comment on timing of next rate hike
• Fed to cut rates by 25 bps at each of the remaining three policy meetings this year – poll
• UK July monthly GDP 0.0% vs +0.2% m/m expected
• US MBA mortgage applications w.e. 6 September +1.4% vs +1.6% prior

Markets:

• JPY leads, USD lag on the day
• European equities a touch higher; S&P 500 futures down 0.1%
• US 10-year yields down 2.6 bps to 3.618%
• Gold up 0.3% to $2,522.42
• WTI crude up 2.6% to $67.49
• Bitcoin down 1.4% to $56,770

The most interesting part of the session was during the handover from Asia to Europe. That came as bond yields dipped and cast a bid on the Japanese yen in FX. USD/JPY in particular fell through to test 141.00 before touching a low of 140.70 during the day. The pair then caught a bounce back after, trading back up to 141.70 now but still down by 0.5%.

As yields fell, it put some light pressure on equities as well. S&P 500 futures fell as much as 0.6% before recovering most of that to be down just 0.1% now.

Focusing back on the bond market, 2-year Treasury yields flirted with a break to its lowest level in over two years. Yields were down by as much as 6 bps to 3.55% at one point, before keeping modestly lower now at 3.58%. 10-year yields on the other hand fell further to 3.61% and is keeping thereabouts.

With Treasury yields falling, the dollar is the laggard on the day as such. EUR/USD is up 0.3% to 1.1050 while USD/CHF fell to 0.8422 initially before rebounding back a little to 0.8460 now. Meanwhile, AUD/USD is also seen up 0.3% to 0.6670 on the day.

In other markets, gold is also starting to eye a further breakout as it hovers near the topside of its recent range. The precious metal is up 0.3% to $2,522 now, with buyers on the edge of their seats in wanting to chase a breakout.

That will be another area to watch out for as we turn the focus and attention to the US CPI report later.

This article was written by Justin Low at www.forexlive.com.

• Prior +1.6%
• Market index 233.7 vs 230.5 prior
• Purchase index 138.6 vs 136.1 prior
• Refinance index 757.8 vs 751.4 prior
• 30-year mortgage rate 6.29% vs 6.43% prior

The average rate of the most popular US home loan dips further to its lowest since February last year. That comes amid a further drop in rates overall and that is helping mortgage activity catch a bounce. Both purchases and refinancing activities also picked up in the past week as such.

This article was written by Justin Low at www.forexlive.com.

The bulls have been huffing and puffing over the last three weeks but they haven’t blown open the door for a stronger technical breakout yet. Gold price action has been consolidating in a bit of a range recently and the next trade is to arguably go with the break that comes.

I’ll continue to point out that there is a certain discomfort in the rise in gold prices this year. That being it is rather one-sided with little to no pullbacks. There have been consolidation phases like the one now and also from April through to June. However, there hasn’t been any meaningful correction to the surging run in 2024.

And that irks me a little even as a gold bull at heart. A healthy correction to the jump higher looks to be overdue but even then, it is going to be but a dip buying opportunity when it comes. At this stage, that’s the only warning signal I can attribute to gold on the charts.

But at the same time, it’s no surprise to see gold staying more bullish considering all the factors in play. China may have said that they have halted gold purchases for now. However, it is China we’re talking about here. So, I do hold my reservations on their actual motives and transparency.

Otherwise, the structural view continues to stay intact for gold as we look towards the Fed kicking off their rate cut cycle next week.

• The very simple case for buying gold

As for the bigger picture, it will be interesting to see how this gold run plays out as we move closer towards the seasonal buying rush in December and January. If the run stretches on, it might complicate the seasonal outlook when the time comes.

This article was written by Justin Low at www.forexlive.com.